The French luxury conglomerate Kering is reportedly on the brink of selling its beauty division to L’Oréal. This deal, anticipated to be valued at around $4 billion, would include the acquisition of the fragrance brand Creed and the rights to develop beauty products associated with Kering’s renowned fashion labels.
Kering’s Strategic Shift in the Beauty Market
Kering’s beauty division was launched in 2023, coinciding with its acquisition of Creed for approximately €3.5 billion (about $4 billion). This strategic move reflects the company’s desire to expand its portfolio in the lucrative beauty sector.
Details of the Sale
- Buyer: L’Oréal, the largest global player in the cosmetics industry.
- Deal Value: Estimated at $4 billion.
- Included Assets:
- Fragrance brand Creed.
- Rights to beauty products for brands like Bottega Veneta, Balenciaga, and Alexander McQueen.
- Announcement Timeline: Potential announcement expected next week.
Financial Context
The sale aligns with ongoing efforts by Kering’s CEO Luca De Meo, who has been in office since September. De Meo is focused on addressing Kering’s mounting debt, which stood at €9.5 billion as of June. The company’s luxury brand Gucci has faced challenges, particularly due to decreased consumer demand in China.
Shares in Kering have experienced significant growth, surging approximately 60% since De Meo’s appointment. This indicates a strong market reaction to the leadership change and potential strategic realignments.
Future Prospects for L’Oréal
L’Oréal’s interest in Kering’s beauty division reflects its ongoing strategy for expansion. Additionally, the company has been approached by representatives of the Armani Group, following Giorgio Armani’s preference for L’Oréal as a buyer for a minority stake in the fashion house.
The potential acquisition of Kering’s beauty assets by L’Oréal represents a significant move in the luxury beauty market and could reshape competitive dynamics in the sector.
